Tag Archive | Congressional Budget Office

CBO Estimates 10-Year Cost of SGR Repeal at $174.5 Billion

According to the latest Congressional Budget Office (CBO) figures, replacing the SGR-based Medicare physician-reimbursement formula over the next 10 years, as proposed in legislation introduced last year, would cost $174.5 billion. But a closer look at the CBO numbers reveals that the accrued physician-payment costs over the same 10 years would be an estimated $137.4 billion if current reimbursement rates were frozen through 2025. That’s a difference of (only) $37.1 billion.

Under current law, fees that physicians receive for Medicare services will be cut by about 21% beginning on April 1, 2015. Two pending pieces of federal legislation—HR 4015 and S 2000—would repeal the SGR formula, but the bills do not include suggestions for covering the cost of an SGR replacement.

The American Hospital Association has gone on record against the “rob-hospitals-to-pay-doctors” approach that some people have advocated, saying in January that it “cannot support any proposal to fix the physician payment problem at the expense of funding for services provided by other caregivers.”

If a permanent repeal of the SGR formula isn’t politically feasible until after the 2016 presidential election, Congress will probably approve another short-term “patch” this year. That would be the 18th time in 12 years that legislators have kicked this expensive can down the road.

Will the New Congress Repeal SGR?

Whether their political persuasions lie left, right, or center, almost all physicians agree that something permanent needs to be done about the sustainable growth rate (SGR) formula used for physician reimbursement under Medicare. Unless some legislative action is taken between now and March 31, 2015, a 21 percent cut in physician Medicare reimbursements will take effect on April 1. So, is the newly constituted Congress ready and willing to act?

Not surprisingly, the answer to that question depends on whom you talk to, according to a recent MedPage Today article. Douglas Holtz-Eakin, PhD, former director of the Congressional Budget Office and current president of the American Action Forum, says “all eyes should be pointed toward 2015” for action on SGR, because the current lame-duck session is unlikely to take much action on health care. However, after the lame ducks hobble home, Holtz-Eakin predicts movement in Congress toward answering the $180 billion question: how to pay for an SGR repeal.

Caroline Pearson, vice president of the healthcare consultancy Avalere, isn’t so optimistic. “I don’t think the SGR will have a permanent fix…until after the 2016 election,” she told MedPage Today, adding that “the ‘pay-fors’ are everything.” Hoping for a Republican president to work with beginning in 2017, GOP members of Congress will fight for entitlement reform that will include an SGR fix, Pearson predicts, opining further that “an SGR fix is unlikely as a standalone [bill].”

If Congress approves another one-year “patch” of the current SGR-based system in early 2015 instead of a repeal, it will be the 18th time over 12 years that legislators have passed such temporary stopgaps. In recent years, both the AMA and the AAOS have staunchly opposed short-term “doc fixes” in favor of a once-and-for-all scrapping of the SGR.

What do you think—will Congress repeal the SGR during 2015?

Links to previous OrthoBuzz coverage of SGR:

https://orthobuzz.jbjs.org/2014/02/13/bipartisan-step-forward-on-sgr-repeal/

https://orthobuzz.jbjs.org/2014/04/03/an-icd-10-win-and-sgr-loss-for-orthopaedists-in-latest-congressional-action/